IF YOUR HOME DOESN’T SELL FAST
by Neil Jenman Reading Time: Apx 2.5 mins From the moment a home is listed for sale, most agents have one goal – to persuade the sellers to reduce their price.…
Article originally published MARCH 2, 2004 –Reviewed and approved.
By Neil Jenman
Agents in Queensland are being warned to cease using bait pricing.
The state’s new Fair-Trading Minister, Margaret Keech, is concerned at the number of agents who advertise false low prices. “This is a serious breach of the law,” she said.
The Minister is right. And her official statement is long overdue in Queensland, where thousands of consumers are the victims of bait pricing.
Bait pricing occurs when agents advertise a home at a price below the amount the sellers are prepared to accept. The agents tell the sellers that such a tactic will increase the number of buyers who inspect a property. It seems as if the agents are helping the sellers. But the main reason for using bait pricing is to convince sellers to lower their prices, thereby making it easier for agents to make sales.
For example, if the homesellers want $500,000, an agent will advertise the home for $450,000 “plus”. This often attracts buyers who can only afford to pay $450,000. The agent then applies pressure to the sellers to lower their price.
Bait pricing also hurts homebuyers by causing them to waste time and money trying to buy homes beyond their price range. Every day, buyers all over Queensland have their hopes dashed because of bait pricing.
But now there are reports that at least one major Queensland real estate company is about to face charges over bait pricing. The penalty could be a fine of more than $200,000.
The Minister is reported as saying, “Such conduct will not be tolerated.”
Despite claims by the Real Estate Institute of Queensland (REIQ) that bait pricing is isolated, it is widespread. And it has been tolerated in Queensland for years. Many agents openly admit it. One even told a homebuyer, “Everyone does it, so what’s the problem?”
Well, the problem, Mr Agent from Paddington, is that bait pricing is illegal. And if you and other agents come up against a Fair-Trading Minister who is serious about cleaning up the real estate industry in Queensland, you and your fellow cheats are going to be in a lot of trouble.
The new Fair-Trading Minister, Margaret Keech, is saying all the right things. Amazingly, the REIQ seems to be taunting her. In response to the claim that more agents may be prosecuted over bait pricing, the CEO of the Institute, Don McKenzie, reportedly said, “That might be a bit of licence taken out by the spin doctors up in George Street” (home of the Office of Fair Trading).
Yes, it might be just spin. The Minister might be bluffing, as some agents are saying. But don’t get too cocky, agents. It’s like when a new teacher arrives at a school. The rowdy pupils wait to see if the teacher is serious or not.
Margaret Keech, the new Minister for Fair Trading in Queensland is a former schoolteacher. And, apparently, a woman of her word.
This is good news for consumers. And bad news for bad agents.
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